In Washington, U.S. Secretary of Agriculture Tom Vilsack and Navy Secretary Ray Mabus unveiled the “Farm to Fleet” program, through which the Navy will begin to add biofuels into its regular domestic purchases of approximately 77 million gallons of jet fuel (JP-5) and marine diesel (F-76) each year.

Initial fuel contracts will be awarded in 2015, with initial RFPs commencing in spring 2014 and first deliveries scheduled for mid-year 2015. The fuels will contain biofuels blends of between 10 and 50 percent.

“The Navy’s intensifying efforts to use advanced, homegrown fuels to power our military benefits both America’s national security and our rural communities,” said Vilsack. “Not only will production of these fuels create jobs in rural America, they’re cost effective for our military, which is the biggest consumer of petroleum in the nation.”

Farm-to-Fleet builds on the USDA/U.S. Navy partnership inaugurated in 2010, when President Barack Obama challenged his Secretaries of Agriculture, Energy and Navy to investigate how they could work together to speed the development of domestic, competitively-priced “drop-in” diesel and jet fuel substitutes.

“A secure, domestically-produced energy source is very important to our national security,” said Navy Secretary Mabus. “Energy is how our naval forces are able to provide presence around the world. Energy is what gets them there and keeps them there. The Farm-to-Fleet initiative we are announcing today is important to advancing a commercial market for advanced biofuel, which will give us an alternative fuel source and help lessen our dependence on foreign oil.

“When fossil fuel prices spike because of world crises, we have to cut back on operational costs to pay higher costs for fuels. When prices spike, we steam less, and train less and neither is a good option. We have to have a stable, domestic source of energy for the Navy.”

“The Navy is open for business,” said Assistant Secretary of the Navy for Energy, Installations and Environment, Vice Admiral Dennis McGinn (USN, Ret.).

The Farm to Fleet Program at a Glance

All fuels purchased will be price competitive with conventional fossil fuels, and will be purchased in annual one-year contracts by the Defense Logistics Agency Energy. The RFP will be open to all companies, worldwide. All fuels will be in-spec, drop-in replacements for conventional fossil fuels.

“We are not going to pay a premium,” said McGinn, “but we are going to expand the types of liquid fuels that the Navy is going to use. By reducing our dependence on a single fuel source, in the long-term we are going to protect the Navy from price volatility and increase our combat effectiveness. “Individual bidding companies will be able to determine, based on their own costs and capacities, how much of a biofuels component to include — between a minimum of 10 percent and a maximum of 50 percent.

Companies will choose to bid on JP-5 jet fuel and F-76 marine diesel (or both), at their discretion, and the Navy has said that it will be fuel agnostic in its contracting — that is, based on market forces it may take more F-76 marine diesel or more JP-5 jet fuel.”We are giving a long-term market signal,” noted McGinn, “to give more market certainty that the Navy and DOD are in this for the long-haul.”

[For newer readers, the military uses slightly different versions of jet fuel and marine diesel. It's fuels are generally less volatile fuel than conventional fuels, with a higher "flash point" that were established because of the harsh conditions that the military must operate under at sea. For this reason, the military cannot simply buy conventional marine diesel or jet fuel, whether it contains biofuels or not].

The Navy’s Transition to Biofuels: Testing and Certification

The Navy began testing aviation biofuels and marine biofuels on a ship-by-ship and jet-by-jet basis several years ago. Last summer, the Navy demonstrated a Green Strike Group operating on biofuels during the 2012 RIMPAC exercises.[RIMPAC is the world's largest international maritime warfare exercise, held every two years out of Pearl Harbor, Hawaii, hosted by the US Pacific Fleet and featuring 22 nations and 42 ships in 2012, enhancing interoperability between Pacific Rim armed forces].

“It was at RIMPAC,” McGinn observed, “that we really got an end-to-end view on all the supply chain issues. Now, we are ready to deploy quickly. Now, it’s down to business. The intention now is to alert industry that we are open for business and that we are starting this program in a very realistic way.”

The Navy’s Transition to Biofuels: Capacity Building and Assurance of Supply

Alongside the testing and certification efforts, the Navy, USDA and DOE had announced a program in 2012 to directly invest up to $510 million, through the DPA Title III office and Commodity Credit Corporation (CCC), in order to assure that capital would be available to build production capacity and offset feedstock costs for drop-in biofuels that would meet the Navy’s needs, timelines and cost goals.

[Note for newer readers: DOE and DOD’s portion goes to DPA Title III to build biorefineries, USDA’s portion is in CCC funds to address feedstock development.]

The Defense Production Act was passed during the Truman Administration to permit the Department of Defense to invest in building production capacity for a wide range of military materials. The Act was passed in recognition that the military, given the nature of its missions, is often the first large customer for a technology. Chicken-and-egg situations can arise where production capacity (for economies of scale) proves impossible to finance for first-of-kind technologies developed by young technology firms. Currently, the DoD supports the development of two dozen technologies through DPA.

3 Comments

I am wondering if the Navy and of course the taxpayer would be interested in paying about $2.00/gallon for the diesel or also called Pure Vegetable Oil (PVO)?
There is a company in the U.S. that can produce this PVO at this very low price.
What is this? It is an Algae to Fuel project that is currently producing limited quantities.
What is needed: Some funding ($11.5M) and about 9 - 12 months lead time to deliver.

This is more taxpayer fleecing and open fraud. "Drop-in" biofuels today are still $30-$60 a gallon. There are hard limits of photosynthesis, thermodynamics, and critical fossil fuel dependencies in cultivated agriculture that limit liquid biofuels to always being more expensive per unit of energy delivered than fossil fuels. Even the Department of Energy reports that non-hydrocarbon, non-"drop-in" corn ethanol, after 8 years of $6 billion-per-year subsidies, is still 85 cents more per gallon than gasoline per unit of energy put in the gas tank (compare E85 to Gasoline prices in Table 2 of http://www.afdc.energy.gov/uploads/publication/alternative_fuel_price_report_oct_2013.pdf ).

If the price of oil or gas skyrockets, so does the price of both food and biofuels because they are critically dependent upon natural gas and petroleum for fertilizer, pesticide, herbicide, equipment fuel, processing plant energy, and hydrotreatment hydrogen; and conventional petroleum will always comprise a minimum of 50% of any resulting blend because of certain performance characteristics that hydrotreated biofuels with their limited diversity of carbon chain length, isomerization, and fractionation cannot match (e.g., cold-flow properties, elastomeric seal compatibility, lubricity, etc.). There is simply never going to be a price crossover as long as ammonia fertilizer is made from natural gas. The most recent price paid by the US Air Force to GEVO for bio-jet fuel in March of 2013 was $59 a gallon. This was the exact same price the Air Force paid for two previous purchases in 2012, and is higher than the $48/gal average price the US military has paid for the 1.4 million gallons of biofuel it has purchased from various vendors since 2009. The price is not coming down and there is no looming breakthrough.

So now the trick has become how to hide the high price. The key is to blend so little of the biofuel in that it is really just an additive or dilutant rather than contributing any significant portion of the energy content of the fuel. If the military only puts 2% Gevo biofuel @ $59/gal into $2.88/gal bulk petroleum fuel (yes current military fuel prices are that low), the net cost for this "biofuel blend" can be made to miraculously equal "only" $4.00/gal. But the military and biofuel industry will still advertise this 2% sham as "biofuel." They have already done it before. This is exactly what the Navy did in the summer of 2012 trying to claim biofuel it purchased from Dynamic Fuels for $26.75 a gallon was only $15 a gallon, recalculating the cost based on a 50-50 blend with far cheaper petroleum.

This is all an intentional deception being perpetrated by political sycophants who are more concerned about their careers than true national security or energy security. DoD and USDA and DoE are bound and determined to give away $510 million dollars on new biorefineries to please Obama, and all they require for the snake oil entrepreneur to get a fistful of taxpayer millions is to promise that they will produce a biofuel blend by 2016 for $4 a gallon. You can guess what the recipe will be.

BTW, DoE already spent $603 million on 23 new biorefineries in 2010. How much cost-competitive biofuel have Americans gotten from that investment? Zero. Google "biofuel bankruptcy" to get a list of the scores of idled biorefineries currently available at fire-sale prices. Brazil has stopped constructing new biorefineries and is running their current fleet of 442 at only 59% capacity. There is absolutely no reason to build a single one more.

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